The consultation paper includes EIOPA’s advice on a number of items that are in the scope of the two calls for advice received from the European Commission: simplified calculations, reduction in reliance on external credit ratings, treatment of guarantees, exposure guaranteed by a third party and exposures to regional governments and local authorities, risk-mitigation techniques, undertaking specific parameters, look-through approach on investment related vehicles and information on loss-absorbing capacity of deferred taxes.
EIOPA invites stakeholders to provide their feedback to the proposed draft advice planned to be submitted to the European Commission in October 2017. The consultation period ends on Thursday, 31 August 2017, the date the feedback has to be received. Comments submitted after the deadline or not submitted on the provided template cannot be processed.
The consultation paper with the template for comments can be viewed here
Background
Solvency II Review - The review of Solvency II is a formal process following the legislative texts from the Solvency II Directive. Recital 150 of the Solvency II Delegated Regulation defines a timeline for the review of the Solvency Capital Requirements standard formula. The first phase of the review will be finalised by the European Commission by December 2018 while the Solvency II framework will be reviewed by 2021. EIOPA started its review with the discussion paper published in December 2016.
Second set of advice on the Solvency II Review – By the end of the year EIOPA will issue its second consultation paper with the following items to be reviewed: risk margin, own funds, policy options on loss-absorbing capacity of deferred taxes, catastrophe risks, premium and reserve risks, mortality and longevity risks, counterparty default risk, currency risk at group level, interest rate risk, simplifying look-through, unrated debt, unlisted equity and strategic participations. EIOPA’s second set of advice will be submitted to the European Commission by February 2018.
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